June 5, 2012

Our View: LePage, Pingree
right on Internet sales tax

As the two elected officials agree, passing this bill would create equity, not new taxes.

There are not many issues on which Gov. Paul LePage and 1st District U.S. Rep. Chellie Pingree are on the same side, so when they line up together we should pay attention.

click image to enlarge

An Amazon.com package is prepared for shipment by a United Parcel Service driver in Palo Alto, Calif. The proposed Marketplace Fairness Act would require online merchants to collect sales taxes, just as their brick and mortar competitors have to do.

The Associated Press

That is what is happening with the Marketplace Fairness Act, which would require online merchants to collect sales taxes, just as their brick and mortar competitors have to do.

LePage says letting online consumers pay only the sales taxes they choose to report hurts state revenues and creates an unfair advantage for online businesses.

Pingree, who is married to S. Donald Sussman, majority share owner of The Portland Press Herald/Maine Sunday Telegram, agrees, saying this bill would provide a boost for Main Street when it could really use it.

Criticism of this bill appears based on the misconception that it would create a new tax or a tax increase. It does neither. This is a tax that is already on the books that cannot be collected because of outdated laws that don't recognize the changing ways that people do business.

Maine customers are supposed to report their online purchases and pay Maine sales tax, but unfortunately many do not. Requiring retailers to collect it is not a tax increase.

Today, a customer with a smartphone can stand in a local retail outlet and conduct a national search to find a better price on a product seen in the store.

The local retailer not only has to pay rent and provide customer service that his online competitors do not, but the local business has to collect a state sales tax. The online retailer does not collect the tax, unless it has a physical presence in the state.

Some retailers, like Amazon, can do millions of dollars worth of business in Maine without collecting any sales tax. Competition on price is fair, but requiring only one competitor to collect taxes is not.

Some critics, including Sen. Olympia Snowe in a recent interview, say that collecting the tax now after letting it slide for so long could take some steam out of the economy, but that is beyond the point. The same case could be made for evading any tax.

LePage and Pingree are both right. Congress should pass the Marketplace Fairness Act and put local retailers on a more equal footing with their online competitors.


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